1. "It's a monstrosity"
If you think the new US FATCA law is tough for us, spare a thought for US citizens who live abroad. They are facing killer penalties if they make any mistake in their US tax returns.

Their law is now assuming that every US citizen living overseas is a tax cheat and that must prove otherwise. Extraordinary. It looks like it will take a tax professional a whole day just to complete one of the required forms. Here is a link to the story in the NY Times:

“It’s a monstrosity,” Steven R. Horton, whose tax practice in Paris advises American expatriates, said of the new demand from the U.S. Internal Revenue Service: Form 8938, the Statement of Specified Foreign Financial Assets. “It compels every taxpayer to try to find a way that they’re guilty of some kind of omission.”

The new requirement comes courtesy of the Foreign Account Tax Compliance Act, or Fatca, an effort to crack down on offshore tax evasion by U.S. citizens. The impetus for Fatca was the revelation that the Swiss bank UBS had been helping thousands of Americans - many of them U.S. residents - to cheat the Internal Revenue Service, an offence for which it paid a $780 million penalty and handed over details on thousands of clients to end prosecution.

The new form requires taxpayers to provide detailed information on their overseas financial accounts, including income derived from them. The penalties for failing to file start at $10,000. Significantly, tax experts warn, filers are subject to major penalties for underreporting - and even where innocent errors are made, they say, it will be up to the taxpayer to convince the IRS examiner of their innocence. The statute of limitations does not expire until after a corrected form is filed.

Proponents say Fatca will bring the U.S. Treasury huge sums each year once the IRS is able to compare individual tax data with reports from foreign financial institutions.

“Offshore tax evasion costs the U.S. jobs and billions of dollars each year, and it puts an unfair burden on the average American taxpayer to make up the difference,” Senator Max Baucus, the Montana Democrat who is chairman of the Senate Finance Committee and a sponsor of the legislation, wrote in an e-mail. “In an era when budgets are tight, it’s critical for the IRS to have the resources it needs to root out tax cheats.”

2. A grim fairy tale - Chinese stats
People are always suspicious of Chinese statistics - the expectation is that they have been sanitised up. So it was a bit of a surprise that Q1 2012 GDP data came in at +8.1% below most analysts estimates of +8.9%. However, now there has been some time to consider the latest data, suspicions are rising that there has in fact been some sanitisation 'up'. That is because the main components mostly seem to be suggesting only a +5% growth. And that's a huge difference that could reverberate around the world.

So how fast did GDP grow in Q1? By far, the best indicator of Chinese economic activity is the generation of electricity. In the January-February period electric output grew by 7.1% year-on-year according to official statistics. In March, output increased 7.2%, the slowest increase for a non-holiday month in a year. Because the growth in electricity outpaces the growth of the economy, it’s evident that China cannot be growing faster than 6%.

Actually, a 5% pace is more realistic because other signs point toward flattening growth. Home and commercial property sales dropped 14.6% in Q1 from the same period last year, for example. Bellwether passenger car sales for the quarter were down 1.8% year-on-year, and sales of commercial vehicles were off a stunning 10.8%. The latter figure, usually neglected by the China-watching community, is particularly important as it suggests general business activity will slow in coming months.

3. Is materialism a mental disorder?
If the desire for ever-more material goods is not itself a mental disorder, it is associated with higher rates of depression, anxiety and anti-social behaviour - or so suggests a new study. If you frame questions from a 'consumer' point of view, the responders are wary and cynical. The same questions framed from a 'citizen' point of view reveals a much more balanced response. ScienceDaily reports:

The findings have both social and personal implications, says psychologist and author of the study, Galen V. Bodenhausen. "It's become commonplace to use consumer as a generic term for people," in the news or discussions of taxes, politics, or health care. If we use term such as Americans or citizens instead, he says, "that subtle difference activates different psychological concerns."

We can also take personal initiative to reduce the depressive, isolating effects of a materialist mindset by avoiding its stimulants - most obviously, advertising. One method: "Watch less TV."

4. It may be Germany that leaves the euro first, rather than the PIIGS
The impacts of a two-speed Europe - one going flat out, the other going backwards - are now getting quite severe. It's basically an unnatural and unsustainable concoction where no country has sovereignty over its own monetary conditions. There's deflation and there is inflation both going on at the same time in different countries, and it is the inflationary effects in Germany that might be the tipping point. The WSJ explores the growing tensions:

Now the boot’s on the other foot. Loose credit conditions have been put in place to help peripheral Europe, and these are leading to wage and housing price pressures in Germany. If sustained, the inflationary forces will only exacerbate the already deep rift between the miserly instincts of the Bundesbank and the desire for easy policy within the rest of the ECB.

It’s hard to see a way out of this conflict. While peripheral Europe flounders under austerity and giant debt loads, Germany flourishes. Unemployment has fallen to 5.8%, creating a scarcity of workers that has attracted large-scale net migration under the EU’s freedom of movement rules.

The result: surging demand for housing, especially in the urban areas. The rate of price increase as calculated by BulwienGesa AG for 125 towns and cities was 5.5% last year, considerably higher than in 2010, which showed a significant 2.5% gain over the prior year. That’s not much by the standards of the pre-crisis U.S., but blazing for Germany.

Meanwhile, wages and salaries per employee rose more sharply in 2011 than at any time since 1993, according to the Bundesbank report. Add to that a recent deal giving Germany’s two million public sector workers a 6.3% wage increase for the next two years and you get fuel being added to a slow-burning fire.

Professor Joseph Stiglitz’s thesis may hold true: The cost for Germany will be so high that it is Germany that will leave the euro first.

So, perceptively my son asked whether it was in my interest to dob scammers into regulators – he asked whether the reason we did not do it much was because of the reasons stated above or because we liked the scammers to be free and profitable. Alas – and I had to confess it – at least part of it was that being a successful short-seller required that regulators were inadequate to the task of policing fraud.

If the case is upheld, damages could be big. The American cases are being pursued under “class action” litigation. This means that if Baltimore’s case is upheld other cities sold the same products will also be able to claim damages. Across America 40 states allow municipalities to enter into swap agreements. The total estimated amount in 2010 was $250 billion-500 billion, according to an IMF paper.

What’s more, cases are being brought under the Sherman Act, America’s antitrust law, which allows for triple damages. Assume the worst and damages for American cities alone could go as high as $40 billion.

7. Satellite data II
Hard on the heels of our report of a satellite census that showed there were almost twice as many Antarctic emperor penguins than thought, 3D altitude maps captured by satellites show glaciers in part of the greater Himalaya range are bucking the global trend of continued ice loss - in fact they are growing. The UK Guardian has the story »

8.The Camorra never sleeps
This story had me riveted. It has nothing to do with the economy or interest rates, so I hope you don't mind if I link to it. Its a fairly long read, but gripping. We should really value the rule of law and an open society. This is what happens when democratic institutions get weak.

It's a crime story, about Naples. For years before they caught him, the Italian police had no idea that Paolo Di Lauro was one of Naples’s most powerful crime bosses, running a drug and counterfeit-goods empire - and responsible for a peace his turf had rarely known. Now authorities may long for the days when he was in charge. The full essay is in Vanity Fair.

“We have no choice. The Camorra has created an anti-state whose very existence threatens the legitimacy of the Italian state. If the courts did not act, they would not be real. If the courts are not real, Italy will not endure. Our role is not to prevail over the Camorra but to go through the motions of trying.”

9. Links between fracking and earthquakes
Scientists from the United States Geological Survey have cautiously weighed in on a subject that has sparked public concern in some parts of their country: spates of small and not-so-small earthquakes in oil- and gas-producing areas. It's a short and somewhat dense scientific note, but it does conclude ...

The acceleration in activity that began in 2009 appears to involve a combination of source regions of oil and gas production ...

The New York Times has an easier-to-read summary of the issue here » The issue is relevant for New Zealand given our drive to produce more oil and gas locally. And then there's this »

10. The last laugh
Someone made very complimentary comments a couple of days ago about this version of Top10. This one's for you, from the archives.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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I agree entirely , I love the new positivism of interest.co.nz ......... the question is , when Bernard returns , will he round-up the greenshoots which have burst forth here , or allow them to flourish ?

..... imagine that , the prince of darkness taking a walk on the bright side of life ....... wow !

No I wasn't GBH..burn the witch .!.burn the witch...!.go Walter you good thing...! I'd be there for you only I couldn't slip the Llama on the train....told the conductor I was taking the wife for a nose job.
Watch out for Key's security detail...they have seen all the episodes of 24 and Another 24, so probably first rate in sussing out a dirty bomb.

Interesting passage:
Casinos, sports arenas, and convention centers don't generate income for those who've lost their jobs. The casino is a particularly apt metaphor for the intellectual bankruptcy of thinking, because, if done well, you can generate short-term income and tax revenues.http://www.foreignpolicy.com/articles/2012/04/16/ed_luce_interview?print...
or Nation of Spoiled Brats

hey Robo The Glen....hows it going in radioland...? have ya made us famous yet...!
As to the above ....you don't really need to know what your talking about to post here....hell pick one at random.... as long as it's contraversial..... anal...repetitive....and you sound plauseable.....outrageous.....or wrong....you should get a response.
And isn't that what we come for ...? the love....the interaction...the family atmos....and most of all the return of Darth Vader.

LIBOR THEFT
So here we have a disaster brewing for tax payers.
The bank defrauds local government who in due course may get huge payouts.
Sad state of affairs since the tax payer guaranteed the bank. So the rate paying public is gets a payout from the tax paying public.

The Next Global Crash: Why You Should Fear the Commodities Bubble
As playwright Arthur Miller once observed, "An era can be said to end when its basic illusions are exhausted." Most of the illusions that defined the last decade -- the notion that global growth had moved to a permanently higher plane, the hope that the Fed (or any central bank) could iron out the highs and lows of the business cycle -- are indeed spent.http://www.theatlantic.com/business/archive/2012/04/the-next-global-cras...

Hmm seems to suggest its all a speculative boom and not real scarcity? not sure here.....it would be interesting to know what is the fair value price v the % added on for thegamblers....
For instance the talk about copper ore being stored strikes me as un-substantiated.....we are talking about storing a lot of rock with some copper in it......why not just buy the mine and shut its gates? strange...
I do think prices will nose dive, but that will be becaus eof collapsed demand as a depression bites....
but its a different perspective ....thanks
regards

Until there is significantly more debt deflation...there is just too much demand for yield by the mindless yield locusts in relation to supply to drive prices down for long.

And if you allow the population to think deflation is here to stay...They will cut back and cause acceleration to the downside...like Invest a Billion ounces of silver into the silver mining operation and only get 100 Million ounces out...

You are in big trouble...

Unless the FED maybe quantative eases and makes up the difference...Then you can buy a bit of time...Of course once you have exhausted fractional reservation of commodities.

When I came here 17+ years ago I bought a cheap "red devil" vacuum cleaner....its now my router table dust extractor so its kind of hammered but still going.....the Dyson I had lasted 18months just from in house use.....but cost $800 v $150...so much for "quality"...death would be laughing...
;]

Also,
Seems some financial sites might just be geting that the problem is supply...http://www.financialsense.com/contributors/gregor-macdonald/understandin...
"Supply, and the recognition of supply, are now the dominant factor in the oil price. A point so obvious, it hardly seems worth making. However, the developed world is still largely operating on the classical economic view that higher prices will make new oil resources available.
That is true. But, it’s just not true in the way most anticipate.
While higher prices have brought on new supply, these resources have been slow to develop, are more difficult to extract, and generally flow at lower rates of production. As the older oil fields of the world decline, the price of oil must reflect the economics of this new tranche of oil resources. There are no vast, new supplies of oil that will come online in 2013, 2014, and 2015 at the scale to negate existing global declines."
So 2012 might be a fairly quiet year....not so sure on 2013
regards

The warning comes as Dutch property tips into deeper slump, with the inventory of unsold homes nearing South European levels. Household debt is the eurozone’s highest at 249pc of income, compared with 202pc in Ireland, 149pc in the UK, 124pc in Spain, 90pc in Germany, 78pc in France and 66pc in Italy - according to Eurostat data from 2010.

The Netherlands is caught in a "negative feedback-loop" as recession and house price falls feed on each other. Building permits have dropped 9pc from a year ago, the lowest since 1953. "The housing market is in a coma," said the Volkskrant newspaper"QUESTIONS 1.What has the fall in building consents in NZ been?2.What is the NZ household debt % of income.

"A drastic contraction of European bank balance sheets during the next 18 months could jeopardise financial stability and economic growth in Europe and beyond, according to forecasts from the International Monetary Fund."